Life insurer Momentum stuck to its guns over a rejected life cover insurance payout to a client who had not disclosed a pre-existing condition despite it not being related to his death.
The insurer said it would open a big can of worms and prejudice existing clients if it were to pay the claim.
This comes as Momentum declined an application for a R2.4 million life insurance payout for Durban resident, Nathan Ganas, who was killed in a hail of bullets trying to protect his wife, Denise, during a hijacking in the driveway of their Shallcross home last March.
Ganas’ claim was declined by the insurer on the grounds he had not disclosed that he was diagnosed with raised blood sugar levels which may have occurred before he completed his application for the policy in 2014.
This past weekend, Momentum contended on social media with users expressing their disappointment over the insurer’s rejection to pay the life cover:
#Momentum is paying more by not paying the widow of the deceased client. The company is bleeding goodwill and having its reputation severely damaged. It’s appearing as a company that lacks ethics and moral judgment.
In a lengthy statement, Momentum said it was truly sorry for Ganas’ tragic death and also had sympathy for the views that the cause of death was not related to the non-disclosure.
But the insurer said that paying the claim would result in an increase in claims which would ultimately increase the premiums for all other clients just because “a client has not acted in good faith”.
“The rejection of the claim was referred to the Ombudsman for Long Term Insurance, who determined that Momentum’s decision was the correct one under the circumstances. In this instance, had the information been known to us, no cover would have been issued in the first place, and no claim would have been paid, regardless of the cause of death,” Momentum said.
“The insurance industry has an obligation to existing clients to act on a consistent basis to manage the shared pool of risk. In spite of the fact that we have absolute sympathy with the widow, it is important to treat non-disclosure in a consistent way and not prejudice the benefits of clients who act in good faith by making concessions to accommodate claims where important information was withheld.”
Momentum said it unfortunately, had to make this decision in order to protect the integrity of its business, in the interest of all their clients who complete their applications with full disclosure.
The insurer has reportedly also asked Ganas’ wife to repay R50,000, which was an instant cash benefit from the policy and which the family used to pay for the funeral.
– African News Agency (ANA), Editing by Catherine Rice